A Revised Interpretation of Risk in Project Management

Abstract

Both project management and finance have their own advanced risk concept, but developing a correct and complete integration of them has not been resolved so far. The novelty of the paper is a general framework for risk management in which the goals of a project are approached by the interests of owners rather than by the regular object-oriented ways. The framework resolves the following contradictions. 1) The traditional risk management approach distributes the total risk of a project among risk classes; as a consequence, the fact that only a fraction of the project risks are assumed by the owners is ignored. 2) Traditional project risk management cannot deal with the phenomenon that higher risks are found in the risk categories during the later periods of a project. 3) The positive deviation from the project goals is not interpretable in the traditional approach. In the new framework risk analysis becomes a more effective tool for all the participants of a project.